Selling to the U.S. Department of Defense – Attractiveness and challenges
The U.S. Department of Defense (DoD) is one of the most sought-after buyers south of the border. In this article we discuss what makes the U.S. DoD so attractive and what Canadian exporters should know about pursuing opportunities with the U.S. military.
Many companies around the world would jump at the chance to sell to the U.S. Department of Defense (DoD). With 2.01 trillion in available spending and nearly $830 billion in planned expenditures (2023), the United States plans to spend 16.4% of its FY 2023 U.S. federal budget on defence. Not only does the United States spend more on defence than any other country, it’s also the largest government procurement department in the world.
But it’s not sheer buying power that makes the DoD such a coveted customer. The DoD is always looking for new technology and solutions, offers transparent procurement, and is a disciplined buyer that pays reliably.
But like any opportunity, there are challenges that vendors need to consider and in this blog, we look at the top attractions and challenges that Canadian companies have encountered when working with the DoD.
Attractiveness: DoD is looking for innovation
Canadian exporters looking to should invest some time and effort in building up their brand profile and try to carve out a distinct niche, advises Darren Boomer, Director, Contract Operations for Canadian Commercial Corporation.
“I know of one Canadian company that was able to land a big contract because they were one of only two companies in the world with rights to use a particular chemical,” says Boomer. “They might not otherwise have been able to compete for that kind of contract, but they were a unique option.”
Not every company can aspire to that kind of product exclusivity, but Boomer says there are other ways to stand out. Because the DoD is always looking for leading edge technology, Canadian businesses that have innovative and next-generation solutions have another path to differentiation and success.
“If you’ve got something truly novel, get it out into the marketplace and make some noise,” he suggests. “In a lot of cases, with the buzz, the DoD will come find you.” The DoD has many innovation programs to pull in and support the development of tech to meet their push for modernization.
By engaging directly with U.S. defense procurement offices, it’s possible for Canadian companies to prove that their product, service or technology exceeds current DoD specifications — and to have those DoD specifications changed. So the next time a call for proposals goes out, their offering will be tailor-made to meet the new requirements.
Challenge: Maturity and meticulousness a must
Working with a large customer like the DoD does also come with some challenges, Boomer notes. Its ultra-precise contracts can be so specific that smaller companies with less in-house contractual expertise might be at risk of missing a term or condition that could result in a costly penalty if not delivered on.
Part of what makes the American military so effective is its culture of high standardization: there is a prescribed, repeatable way of doing virtually everything. As a result, DoD contracts have had the same format and style for years, with very specific (and sometimes old-fashioned) language.
“They require specific fonts and even the use of specific pencils on hand-written forms,” Boomer explains. “Instructions need to be followed exactly. Most defence companies are used to this, but the whole procurement and contracting approach might come as a shock to an agile, efficiency-oriented software firm.”
Attractiveness: Transparent procurement
There are many databases Canadian companies can use to learn about DoD buying patterns, awarded contracts, and bid opportunities. This level of transparency allows Canadian companies to learn about what the DoD has purchased in the past, from whom and for what price and use this information to formulate their product, sales and marketing strategy.
Federal Procurement Data System – Next Generation is a repository of all federal contracting data for contracts over $25,000. With this system, Canadian companies can see which agencies have contracts and with whom they have contracts, what agencies buy, and which contractors have contracts.
USASpending.gov contains information for each federal contract. Canadian companies can use this information to help identify procurement trends within the government and potential opportunities.
Government agencies use sam.gov to list contracts over $25,000. Canadian companies can use CCC’s Global Bid Opportunity Finder to find opportunities from sam.gov and other government agencies. If you are a Canadian company, register for free!
Selling to the U.S. DoD is a powerful way for Canadian companies of all types and sizes to elevate their business. Learn how to take advantage of this huge opportunity with CCC’s step-by-step guide.
Challenge: Building relationships
Building relationships and networking is also critical to success with the DoD — and this often marks the difference between Canadian and American companies. Canadian companies tend to believe the strength of their offering will draw customers, while American firms understand the need to hustle to capture the attention of potential buyers.
“Canadian companies need to ensure they’re competitive in every aspect of the sales process,” explains Boomer. “In the boardroom, on the golf course, everywhere.”
Canadian companies looking to work with the DoD should make connections by getting to know the staff at National Defence’s Innovation for Defence Excellence and Security (IDEaS) program, Trade Commissioner team in Washington and at CCC who work directly with the DoD and can guide you on programs, resources, opportunities and upcoming events.
Attractiveness: Information and networking opportunities
To help build relationships and identify opportunities, it helps to stay on top of recent U.S. defense and military news. Releases from the U.S. Department of Defense provide information on several topics including program funds, technology strategies and events. You can also follow the Department of Defense on Twitter, @DeptofDefense.
The National Defense Industrial Association’s website provides a Calendar of Events, including webinars and conferences. The search functionality allows visitors to filter by division, chapter, affiliate, topic, category, date event and keywords.
CCC, in cooperation with Canada’s Department of National Defence and other Government of Canada departments, often advertises relevant opportunities for Canadian companies. Canadian companies should also look to participate in industry events like the recent IDEaS Marketplace held in Ottawa. You can learn more about upcoming opportunities by following CCC on LinkedIn,or connecting with your local industry partner that advertises these opportunities.
Opportunity: Canadian support to sell to DoD
If you are a Canadian company looking to sell to the U.S. DoD, our Selling to the U.S. military provides a step-by-step guide on how to get your company and product registered with the DoD. CCC’s Global Bid Opportunity Finder provides a consolidated listing of all bid opportunities on sam.gov and other select government agencies. If you are a Canadian company, register for free!
Once you are ready to sell and have an opportunity on hand, CCC’s U.S. DoD Prime Contractor service is available to help you navigate the U.S. DoD procurement system and compete for contracts on equal footing with U.S firms. The service is free to Canadian businesses and U.S. DoD buyers and is supported by both the Government of Canadian and the United States government.
This article will guide you through everything you need to know about the opportunities available to Canadian-based U.S. DoD contractors.
Learn about the top spending domains of the U.S. DoD procurement market.
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